CALCULATION AGENCY AGREEMENT
CALCULATION AGENCY AGREEMENT, dated as of August 5, 2002 (the "Agreement"),
between Xxxxxx Brothers Holdings Inc. (the "Company") and Xxxxxx
Brothers Inc., as Calculation Agent.
WHEREAS, the Company has authorized the issuance of up to $58,500,000
aggregate principal amount of Dow Xxxxx Industrial AverageSM SUNS(R), 112.5%
Minimum Redemption PrincipalPlus Stock Upside Note Securities(R) Due August 5,
2007* (the "Securities");
WHEREAS, the Securities will be issued under an Indenture dated as of
September 1, 1987, between the Company and Citibank, N.A., as Trustee (the
"Trustee"), as supplemented and amended by supplemental indentures dated as of
November 25, 1987, November 27, 1990, September 13, 1991, October 4, 1993,
October 1, 1995, and June 26, 1997, and incorporating Standard Multiple Series
Indenture Provisions dated July 30, 1987, as amended November 16, 1987
(collectively, the "Indenture"); and
WHEREAS, the Company requests the Calculation Agent to perform certain
services described herein in connection with the Securities;
NOW THEREFORE, the Company and the Calculation Agent agree as follows:
1. Appointment of Agent. The Company hereby appoints Xxxxxx Brothers Inc.
as Calculation Agent and Xxxxxx Brothers Inc. hereby accepts such appointment as
the Company's agent for the purpose of performing the services hereinafter
described upon the terms and subject to the conditions hereinafter mentioned.
2. Calculations and Information Provided. In response to a request made by
the Trustee for a determination of the Maturity Payment Amount due at Stated
Maturity of the Securities, the Calculation Agent shall determine such Maturity
Payment Amount and notify the Trustee of its determination. The Calculation
Agent shall also be responsible for (a) the determination of the Closing Level
on each Measurement Date, (b) the determination of the Capped Quarterly Returns
for each Measurement Date, (c) the determination of the Equity Bonus, (d) the
determination of the Successor Index if publication of the Index is discontinued
and (e) the determination of whether a Market Disruption Event has occurred. The
Calculation Agent shall notify the Trustee of any such adjustment or if a Market
Disruption Event has
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* "Dow Xxxxx" and "Dow Xxxxx Industrial Average" are servicemarks of Dow
Xxxxx & Company, Inc. and have been licensed for use by Xxxxxx Brothers
Holdings Inc. The Securities, based on the performance of the Dow Xxxxx
Industrial Average, are not sponsored, endorsed, sold or promoted by
Dow Xxxxx, and Dow Xxxxx makes no representation regarding the
advisability of investing in the Securities.
"SUNS" and "Stock Upside Note Securities" are trademarks of Xxxxxx
Brothers Inc.
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occurred. Annex A hereto sets forth the procedures the Calculation Agent will
use to determine the information described in this Section 2.
3. Calculations. Any calculation or determination by the Calculation Agent
pursuant hereto shall (in the absence of manifest error) be final and binding.
Any calculation made by the Calculation Agent hereunder shall, at the Trustee's
request, be made available at the Corporate Trust Office.
4. Fees and Expenses. The Calculation Agent shall be entitled to reasonable
compensation for all services rendered by it as agreed to between the
Calculation Agent and the Company.
5. Terms and Conditions. The Calculation Agent accepts its obligations
herein set out upon the terms and conditions hereof, including the following, to
all of which the Company agrees:
(a) in acting under this Agreement, the Calculation Agent is acting solely
as an independent expert of the Company and does not assume any obligation
toward, or any relationship of agency or trust for or with, any of the holders
of the Securities;
(b) unless otherwise specifically provided herein, any order, certificate,
notice, request, direction or other communication from the Company or the
Trustee made or given under any provision of this Agreement shall be sufficient
if signed by any person who the Calculation Agent reasonably believes to be a
duly authorized officer or attorney-in-fact of the Company or the Trustee, as
the case may be;
(c) the Calculation Agent shall be obliged to perform only such duties as
are set out specifically herein and any duties necessarily incidental thereto;
(d) the Calculation Agent, whether acting for itself or in any other
capacity, may become the owner or pledgee of Securities with the same rights as
it would have had if it were not acting hereunder as Calculation Agent; and
(e) the Calculation Agent shall incur no liability hereunder except for
loss sustained by reason of its gross negligence or wilful misconduct.
6. Resignation; Removal; Successor. (a) The Calculation Agent may at any
time resign by giving written notice to the Company of such intention on its
part, specifying the date on which its desired resignation shall become
effective, subject to the appointment of a successor Calculation Agent and
acceptance of such appointment by such successor Calculation Agent, as
hereinafter provided. The Calculation Agent hereunder may be removed at any time
by the filing with it of an instrument in writing signed by or on behalf of the
Company and specifying such removal and the date when it shall become effective.
Such resignation or removal shall take effect upon the appointment by the
Company, as hereinafter provided, of a successor Calculation Agent and the
acceptance of such appointment by such successor Calculation Agent. In the event
a successor Calculation Agent has not been appointed and has
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not accepted its duties within 90 days of the Calculation Agent's notice of
resignation, the Calculation Agent may apply to any court of competent
jurisdiction for the designation of a successor Calculation Agent.
(b) In case at any time the Calculation Agent shall resign, or shall be
removed, or shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or make an assignment for the benefit of its creditors or consent to
the appointment of a receiver or custodian of all or any substantial part of its
property, or shall admit in writing its inability to pay or meet its debts as
they mature, or if a receiver or custodian of it or all or any substantial part
of its property shall be appointed, or if any public officer shall have taken
charge or control of the Calculation Agent or of its property or affairs, for
the purpose of rehabilitation, conservation or liquidation, a successor
Calculation Agent shall be appointed by the Company by an instrument in writing,
filed with the successor Calculation Agent. Upon the appointment as aforesaid of
a successor Calculation Agent and acceptance by the latter of such appointment,
the Calculation Agent so superseded shall cease to be Calculation Agent
hereunder.
(c) Any successor Calculation Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor, to the Company and to the Trustee an
instrument accepting such appointment hereunder and agreeing to be bound by the
terms hereof, and thereupon such successor Calculation Agent, without any
further act, deed or conveyance, shall become vested with all the authority,
rights, powers, trusts, immunities, duties and obligations of such predecessor
with like effect as if originally named as Calculation Agent hereunder, and such
predecessor, upon payment of its charges and disbursements then unpaid, shall
thereupon become obligated to transfer, deliver and pay over, and such successor
Calculation Agent shall be entitled to receive, all moneys, securities and other
property on deposit with or held by such predecessor, as Calculation Agent
hereunder.
(d) Any corporation into which the Calculation Agent hereunder may be
merged or converted or any corporation with which the Calculation Agent may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Calculation Agent shall be a party, or any
corporation to which the Calculation Agent shall sell or otherwise transfer all
or substantially all of the assets and business of the Calculation Agent shall
be the successor Calculation Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
7. Certain Definitions. Terms not otherwise defined herein or in Annex A
hereto are used herein as defined in the Indenture or the Securities.
8. Indemnification. The Company will indemnify the Calculation Agent
against any losses or liability which it may incur or sustain in connection with
its appointment or the exercise of its powers and duties hereunder except such
as may result from the gross negligence or wilful misconduct of the Calculation
Agent or any of its agents or employees. The Calculation Agent shall incur no
liability and shall be indemnified and held harmless by the Company for or in
respect of any action taken or suffered to be taken in good faith by the
Calculation Agent in reliance upon written instructions from the Company.
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9. Notices. Any notice required to be given hereunder shall be delivered in
person, sent (unless otherwise specified in this Agreement) by letter, telex or
facsimile transmission or communicated by telephone (confirmed in a writing
dispatched within two Business Days), (a) in the case of the Company, to it at
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (facsimile: (000) 000-0000)
(telephone: (000) 000-0000), Attention: Treasurer, with a copy to 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (facsimile: (000) 000-0000) (telephone: (212)
000-0000), Attention: Corporate Secretary, (b) in the case of the Calculation
Agent, to it at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (facsimile: (646)
000-0000) (telephone: (000) 000-0000), Attention: Equity Derivatives Trading and
(c) in the case of the Trustee, to it at 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (facsimile: (000) 000-0000) (telephone: (000) 000-0000),
Attention: Corporate Trust Department or, in any case, to any other address or
number of which the party receiving notice shall have notified the party giving
such notice in writing. Any notice hereunder given by telex, facsimile or letter
shall be deemed to be served when in the ordinary course of transmission or
post, as the case may be, it would be received.
10. Governing Law. This Agreement shall be governed by and continued in
accordance with the laws of the State of New York.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
12. Benefit of Agreement. This Agreement is solely for the benefit of the
parties hereto and their successors and assigns, and no other person shall
acquire or have any rights under or by virtue hereof.
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IN WITNESS WHEREOF, this Calculation Agency Agreement has been
entered into as of the day and year first above written.
XXXXXX BROTHERS HOLDINGS INC.
By:/s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Vice President
XXXXXX BROTHERS INC.,
as Calculation Agent
By:/s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Vice President
ANNEX A
1. The Index.
The Index is the Dow Xxxxx Industrial AverageSM, as calculated by Dow Xxxxx
& Company, Inc. (the "Index").
The Index is a price-weighted index of 30 common stocks chosen by the
editors of The Wall Street Journal as representative of a broad cross-section of
U.S. industry. As of July 29, 2002, the component companies of the Dow Xxxxx
Industrial Average were as follows: 3M Company, Alcoa Inc., American Express
Company, AT&T Corp., The Boeing Company, Caterpillar Inc., Citigroup Inc., The
Coca-Cola Company, E.I. du Pont de Nemours and Company, Xxxxxxx Kodak Company,
Exxon Mobil Corporation, General Electric Company, General Motors Corporation,
Hewlett-Packard Company, The Home Depot, Inc., Honeywell International Inc.,
Intel Corporation, International Business Machines Corporation, International
Paper Company, X.X. Xxxxxx Xxxxx & Co., Xxxxxxx & Xxxxxxx, XxXxxxxx'x
Corporation, Merck & Co., Inc., Microsoft Corporation, Xxxxxx Xxxxxx Companies.
Inc., The Procter & Xxxxxx Company, SBC Communications Inc., United Technologies
Corporation, Wal-Mart Stores, Inc. and The Xxxx Disney Company.
2. Determination of the Maturity Payment Amount.
The Calculation Agent shall determine (i) the Capped Quarterly Returns for
each of the 20 Measurement Periods, (ii) the Equity Bonus and (iii) the amount
payable at Stated Maturity for each $1,000 principal amount of Securities (the
"Maturity Payment Amount").
The Maturity Payment Amount shall equal the sum of (a) $1,125 and (b) the
Equity Bonus.
3. Discontinuance of the Index.
(a) If Dow Xxxxx & Company, Inc. ("Dow Xxxxx") discontinues publication of
the Index and Dow Xxxxx or another entity publishes a successor or substitute
index (the "Successor Index") that the Calculation Agent determines, in its sole
discretion, to be comparable to the discontinued Index, then the Calculation
Agent shall calculate the Capped Quarterly Returns for each Measurement Period
pursuant to Section 2 hereof by reference to the index level of such Successor
Index at the Close of Trading on the NYSE, AMEX, Nasdaq or the relevant exchange
or market for the Successor Index on the date that any Capped Quarterly Return
is to be determined.
(b) Upon any selection by the Calculation Agent of a Successor Index, the
Company shall promptly give notice to the holders of the Securities.
(c) If Dow Xxxxx discontinues publication of the Index prior to, and such
discontinuance is continuing on, the date that any Capped Quarterly Return is to
be determined and the Calculation Agent determines that no Successor Index is
available at such time, then, on such date, the Calculation Agent shall
determine the Capped Quarterly Return to be used in
computing the Equity Bonus. The Ending Index Level to be used in computing the
Capped Quarterly Return shall be computed by the Calculation Agent in accordance
with the formula for and method of calculating the Index last in effect prior to
such discontinuance, using the Closing Level (or, if trading in the relevant
securities has been materially suspended or materially limited, its good faith
estimate of the Closing Level that would have prevailed but for such suspension
or limitation) at the close of the principal trading session on such date of
each security most recently comprising the Index on the primary organized U.S.
exchange or trading system.
4. Alteration of Method of Calculation.
If at any time the method of calculating the Index or a Successor Index, or
the Ending Index Level to be used in computing the Capped Quarterly Return, is
changed in a material respect, or if the Index or a Successor Index is in any
other way modified so that such Index does not, in the opinion of the
Calculation Agent, fairly represent the value of the Index or such Successor
Index had such changes or modifications not been made, then, from and after such
time, the Calculation Agent will, at the Close of Trading in New York City on
the date that the Ending Index Level to be used in computing the Capped
Quarterly Return is to be determined, make such calculations and adjustments as,
in the good faith judgment of the Calculation Agent, may be necessary in order
to arrive at a level of a stock index comparable to the Index or such Successor
Index, as the case may be, as if such changes or modifications had not been
made, and calculate the Capped Quarterly Returns and the Equity Bonus with
reference to the Index or such Successor Index, as adjusted. Accordingly, if the
method of calculating the Index or a Successor Index is modified so that the
level of such index is a fraction of what it would have been if it had not been
modified (e.g., due to a split in the index), then the Calculation Agent shall
adjust such index in order to arrive at a level of the Index or such Successor
Index as if it had not been modified (e.g., as if such split had not occurred).
Set forth below are the terms used in the Agreement and in this Annex A.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"AMEX" shall mean the American Stock Exchange LLC.
"Business Day", notwithstanding any provision in the Indenture, shall mean
any day that is not a Saturday, a Sunday or a day on which the NYSE, the Nasdaq
or the AMEX is not open for trading or banking institutions or trust companies
in the City of New York are authorized or obligated by law or executive order to
close.
"Calculation Agent" shall mean the person that has entered into an
agreement with the Company providing for, among other things, the determination
of the Equity Bonus and the Maturity Payment Amount, which term shall, unless
the context otherwise requires, include its successors and assigns. The initial
Calculation Agent shall be Xxxxxx Brothers Inc.
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"Capped Quarterly Return", when used with respect to any Measurement
Period, shall mean the lesser of:
(x) Ending Index Level - Starting Index Level; and
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Starting Index Level
(y) 6%.
"Close of Trading" shall mean 4:00 p.m., New York City time.
"Closing Level" shall mean the last reported level of the Index or the
Successor Index, as the case may be, at 4:00 p.m., New York City time, as
reported by Dow Xxxxx & Company, Inc. or the publisher of the Successor Index,
as the case may be.
"Company" shall have the meaning set forth in the preamble to this
Agreement.
"Ending Index Level" shall mean, for any Measurement Period, the Closing
Level on the Measurement Date at the end of that Measurement Period.
"Equity Bonus" shall mean, with respect to each $1,000 principal amount of
Securities, the greater of (i) zero and (ii) the product of:
(1) $1,000; and
(2) the sum of the Capped Quarterly Returns for 20 quarterly Measurement
Periods less 12.5%.
"Indenture" shall have the meaning set forth in the preamble to this
Agreement.
"Index" shall have the meaning assigned thereto in Section 1 of this Annex
A.
"Market Disruption Event", on any day, shall mean any of the following
events as determined by the Calculation Agent:
(i) A suspension, absence or material limitation of trading in 20% of more
of the underlying stocks which then comprise the Index or any Successor Index,
as the case may be, has occurred on that day, in each case, for more than two
hours of trading or during the one-half hour period preceding the Close of
Trading on the primary organized U.S. exchange or trading system on which those
stocks are traded or, if in the case of a common stock not listed or quoted in
the United States, on the primary exchange, trading system or market for that
security. Limitations on trading during significant market fluctuations imposed
pursuant to the rules of any primary organized U.S. exchange or trading system
similar to NYSE Rule 80B or any applicable rule or regulation enacted or
promulgated by the NYSE, any other exchange, trading system, or market, any
other self regulatory organization or the Securities and Exchange Commission of
similar scope or as replacement for Rule 80B, may be considered material.
Notwithstanding the first sentence of this paragraph, a Market Disruption Event
for a security traded on a bulletin
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board means a suspension, absence or material limitation of trading of that
security for more than two hours or during the one hour period preceding 4:00
p.m., New York City time.
(ii) A suspension, absence or material limitation has occurred on that day,
in each case, for more than two hours of trading or during the one-half hour
period preceding the Close of Trading in options contracts related to the Index
or any Successor Index, as the case may be, whether by reason of movements in
price exceeding levels permitted by an exchange, trading system or market on
which those options contracts are traded or otherwise.
(iii) Information is unavailable on that date, through a recognized system
of public dissemination of transaction information, for more than two hours of
trading or during the one-half hour period preceding the Close of Trading, of
accurate price, volume or related information in respect of 20% or more of the
underlying stocks which then comprise the Index or any Successor Index, as the
case may be, or in respect of options contracts related to the Index or any
Successor Index, as the case may be, in each case traded on any major U.S.
exchange or trading system or in the case of securities of a non-U.S. issuer,
traded on the primary non-U.S. exchange, trading system or market.
For purposes of determining whether a Market Disruption Event has
occurred:
(i) a limitation on the hours or number of days of trading shall not
constitute a Market Disruption Event if it results from an announced change in
the regular business hours of the relevant exchange, trading system or market;
(ii) any suspension in trading in an options contract on the Index or any
Successor Index, as the case may be, by a major securities exchange, trading
system or market by reason of (a) a price change violating limits set by that
securities market, (b) an imbalance of orders relating to those contracts, or
(c) a disparity in bid and ask quotes relating to those contracts, shall
constitute a Market Disruption Event notwithstanding that the suspension or
material limitation is less than two hours;
(iii) a suspension or material limitation on an exchange, trading system or
in a market shall include a suspension or material limitation of trading by one
class of investors provided that the suspension continues for more than two
hours of trading or during the last one-half hour period preceding the Close of
Trading on the relevant exchange, trading system or market but shall not include
any time when the relevant exchange, trading system or market is closed for
trading as part of that exchange's, trading system's or market's regularly
scheduled business hours; and
(iv) "Trading systems" include bulletin board services.
"Maturity Payment Amount" shall have the meaning set forth in Section 2 of
this Annex A.
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"Measurement Date" shall mean November 1, 2002, February 1, 2003, May 1,
2003, August 1, 2003, November 1, 2003, February 1, 2004, May 1, 2004, August 1,
2004, November 1, 2004, February 1, 2005, May 1, 2005, August 1, 2005, November
1, 2005, February 1, 2006, May 1, 2006, August 1, 2006, November 1, 2006,
February 1, 2007, May 1, 2007 and August 1, 2007, or if such day is not a
Business Day, the next Business Day.
"Measurement Period" shall mean (a) the period between July 31, 2002 and
the first Measurement Date and (b) the period between any two consecutive
Measurement Dates.
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
"NYSE" shall mean The New York Stock Exchange, Inc.
"Starting Index Level" shall mean (a) when used with respect to the first
Measurement Period, 8736.59, and (b) when used with respect to any other
Measurement Period, the Ending Index Level for the immediately preceding
Measurement Period.
"Stated Maturity" shall mean August 5, 2007, or if a Market Disruption
Event occurs on August 1, 2007, on the third Business Day after such Market
Disruption event ceases.
"Successor Index" shall mean such substitute index as the Calculation Agent
may select pursuant to the Calculation Agency Agreement upon discontinuance of
the Index.
"Trustee" shall have the meaning set forth in the preamble to this
Agreement.
